On Monday, Compass Point adjusted its outlook for FTAI Infrastructure (NASDAQ: FIP) shares, increasing the price target to $11 from the previous $7 while maintaining a Buy rating.
The revision follows FTAI Infrastructure’s first-quarter 2024 adjusted EBITDA report, which showed $27.2 million, falling short of the $38.8 million estimate. The core segment’s adjusted EBITDA was also below expectations at $37.2 million compared to the anticipated $43.0 million.
The shortfall was attributed to an unforeseen refinery outage at Jefferson Terminal, which impacted the EBITDA by more than $3 million. Additionally, the company faced higher professional expenses and larger losses in non-core assets than predicted. Despite these setbacks, Compass Point is not overly concerned, expecting a complete reversal of the impact in the second quarter of 2024.
FTAI Infrastructure has announced new initiatives and an improved forward outlook, which include a capital structure action at Jefferson Terminal and new commercial opportunities at Transtar. These developments are expected to add approximately $3.40+ in value per share and contribute around $20 million in incremental EBITDA.
Jefferson Terminal has been experiencing record throughput volumes since April and is anticipated to report record results for the second quarter of 2024.
The company is also on track to exit the fiscal year 2024 with an estimated $80 million annualized EBITDA run-rate. In addition to Jefferson Terminal’s performance, Transtar continues to scale EBITDA and third-party customer revenue, Repauno is nearing contracts for Phase 2 construction, and there is emerging interest in datacenter opportunities at LREG.
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These factors contribute to the analyst’s belief that FTAI Infrastructure is increasing its upside potential and should be recognized for its value creation efforts.
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